Economic crisis in Italy hinders potential for growth

31st of October 2012

In the latest of our special country focus reports, ECJ takes a look at the cleaning sector of Italy. Giuseppe Gherardelli, general secretary of ANIP (National Association of Cleaning Companies) and UNIFERR (Union of Railway Cleaning Companies), offers his viewpoint on the contract cleaning sector. Both organisations are part of FISE, a member of Confindustria. And Toni D’Andrea of Afidamp – the Association of Italian Machine Manufacturers, Products, Equipment for Professional Cleaning and Hygiene Environments – provides statistics for manufacturing.

In Italy no official statistics for the professional contract cleaning sector exist and assembling data is extremely difficult, explained Giuseppe Gherardelli, general secretary of ANIP (National Association of Cleaning Companies) and UNIFERR (Union of Railway Cleaning Companies). However estimations have been made.

“The turnover of cleaning companies - both public and private sector - is estimated to be 8538 million euros, of which an estimated 65 per cent is work contracted out by public and private bodies. The estimated number of contractors operating in the market is 22,776 - made up of 4,776 companies with a turnover over 100,000 euros and 18,000 companies under 100,000 euros.

“In 2010 the number of cleaning staff was around 434,891, 70 per cent of them part-time. Women accounted for 70 per cent of that figure, 15 per cent were not Italian nationals (EU and non EU members) and only 10 per cent of workers were members of a trades union.”

Bearing in mind that the total number of cleaners in 2009 (442,741) was slightly higher than in 2008, and the number for 2010 (434,891) was closer to the 2008 value (431,601), we can see that the market and employment levels have been fairly stable during that period.

In the period 2008-2010, 65 per cent of cleaning services in Italy were contracted out. Dominating the market are names such as Manutencoop FM with 10,648 employees and a turnover of 814,761,000 euros; Coopservice with 14,541 employees and 613,866,000 euros turnover; Team Service with 193,571,000 euros turnover; CNS with 611,127,000 euros turnover; CICLAT with 188,399,000 euros; Dussmann Service with 10,823 employees and 313,566,000 euros turnover; Markas with turnover of135,636,000 euros and 5,068 employees; and Roma Multiservizi with around 4,000 employees.

The biggest markets for the contract cleaning sector are offices, hospitals, schools, leisure centres, industrial and farming/food areas, and shops and commercial spaces, hotels and museums.

“The economic crisis has caused a significant contraction in the market,” explained Gherardelli, "only partially compensated for by new processes of outsourcing. In particular the cuts to public expenditure are causing a loss in sales and employment in the health sector and in the cleaning of schools, where thousands of jobs are at stake.

Many jobs at stake

“Alongside the public expenditure cuts the crisis is causing the closure of many private businesses, with subsequent loss or reduction of clients for cleaning companies.”

Gherardelli continued: “Another matter of concern for the public contract sector is the modification put into force in 2010 of the specific sector regulations for the criteria to win tenders on the basis of the most economically profitable bid. This reform specifies that even tenders which are proffered with the criteria of the most economically profitable offer are effectively tendered at the lowest price. Which makes it more and more difficult for services to be adequately compensated.”

Managing Italy’s current economic crisis is certainly the contract cleaning industry’s greatest challenge currently, Gherardelli says, along with maintaining employment and quality of services. But there are still opportunities for growth, in sectors like hotels where outsourcing levels continue to be low.

All these economic factors inevitably affect employment in the cleaning industry, and Gherardelli explained that it is difficult for companies to commit to providing a high quality professional service rather than low cost services provided by workers who are illegal as far as salary, national insurance contributions and tax are concerned. “We are seeking to qualify the sector to meet the needs of our clients, and to work in partnership with them, however these objectives clash with a massive lack of cashflow throughout the country for all our clients.”

Like many other European countries, the Italian cleaning sector has evolved towards the provision of a wider range of facilities management services. This has had a positive impact on employment and on the sector’s turnover. However now the market is in a more difficult phase, is having to defend its existing business and is facing many widespread issues of illegality.

Gherardelli concludes: “We are working with institutions to define a system to qualify companies which takes into consideration the quality of the services being offered in order to differentiate those certified companies from the ones that are not operating in a proper way. This project is still at its very earliest stages however.”

The manufacturers

According to the latest data from Afidamp – the Association of Italian Machine Manufacturers, Products, Equipment for Professional Cleaning and Hygiene Environments – the market for the production of cleaning machines and other products was worth 1.5 billion euros in 2011. This represents growth of three per cent compared to 2010. The last 10 years have been characterised by almost uninterrupted growth, with 2009 being the only year showing a negative result.

These figures, Afidamp says, now make Italy one of the world’s leading manufacturing nations, along with the US and Germany. A total of 64 per cent of machine and equipment sales are made abroad, with Brazil and Russia accounting for a large percentage of exports, along with India and China. These are the countries with most potential for growth, says Afidamp, however China is also a major trading competitor.

Europe still important

The countries of Europe are also still important markets for Italian producers, particularly France and Germany. Among the non-European markets, the most important are the Far East and the Middle East, followed to a lesser extent by Canada and the United States.

Machines for cleaning indoors account for 70 per cent of export value for Italian companies; scrubbing and wet/dry vacuum cleaners 74 per cent; single brush machines 70 per cent; high pressure cleaners 64 per cent; and steam generators 83 per cent. There are also positive signs for the domestic market, led by chemicals that have recorded an increase in sales of six per cent over 2010.

And the growth potential for product manufacturers is still significant, says Afidamp. A study conducted by ISPO research institute at Forum Pulire in March showed that 95 per cent of companies managing their cleaning service internally use domestic products and not professional ones. "This means that for the manufacturers there is potentially a really big market," said Matteo Marino, president of AfidampFAB.

Analysing more closely the figures for production, machines represent 33 per cent of total revenue, followed by chemicals at 19 per cent; equipment at five per cent; away-from-home tissue products at 27 per cent; fibres and cloths at two per cent; accessories and spare parts at five per cent; and other categories at nine per cent. Lombardy, Veneto and Emilia Romagna regions are home to the largest percentage of production.

In terms of how the manufacturers in the sector are structured, 36 per cent of them are small businesses with turnover up to four million euros. Fifty-two per cent are medium-sized enterprises with a turnover between four and 30 million euros, with the remaining 12 per cent being large Italian groups with turnover more than 30 million euros. A significant majority of manufacturers – 82 per cent – are based in the north of Italy.

The national market is driven by chemical sales, accounting for 32 per cent, followed by machines with 24 per cent; paper, fibre and cloths at 23 per cent; and three per cent for equipment.